Automated Income Tax Arrears Relief Calculator with Form 10E from the F.Y. 2000-01 to F.Y. 2019-20 ( Updated Version)

HOW TO CLAIM RELIEF WHEN SALARY IS PAID IN ARREARS OR IN ADVANCE

Whereby any portion of assessee’s salary is received in arrears or in advance or by reason of his having received in any one financial year salary for more than 12 months or payment which under the provisions of section 17(3) is a profit in lieu of salary, he is hence taxed at a higher slab then that at which it would otherwise have been assessed. The Assessing The officer shall, on an Application made to him, grant such relief as prescribed. The Procedure for computing the relief is given in Rule 21.  This relief is provided in the financial year in which such arrears have been received.

 The Procedure to calculate the amount of relief when salary is paid in arrears or in advance:-

STEP 1

First of all, calculate the tax payable of the previous year in which the arrears /advance salary is received on

1.Total Income inclusive of Additional Salary

2. Total Income exclusive of Additional Salary

The Difference between 1 & 2 is the tax on additional salary Included in total Income.

STEP 2

Now calculate the tax payable of every previous year to which the additional salary relates to

3. 3.The total Income including Additional Salary
   The Total Income excluding Additional Salary

Calculate the difference between 4 & 5 for every previous year to which the additional salary relates & aggregates them.

STEP 3

The Admissible Relief shall be the Excess between the tax on Additional salary as calculated under STEP 1 & STEP 2.

No relief if:

·                                 There is no excess between the tax calculated on Additional Salary (Step 1 & Step 2)

·                                 In respect of any amount received or receivable by an assessee on his voluntary retirement or termination of his service in accordance with any the scheme, the assessee has claimed exemption u/s 10(10C) in respect of such the compensation received on voluntary retirement in the same assessment year or any other assessment year.

 WHERE AND HOW TO FURNISH INFORMATION FOR CLAIMING RELIEF

In the case where the assessee entitled to relief is a government servant or an employee in a company, co-operative society, local authority, university, association, institution, he
may furnish the particulars to his employer who is responsible for making the payment referred to in section 192(1) in specified form 10E.

In the case of other employees, the application for relief shall have to be made to the Assessing Officer instead of the Employer.

Download Automated Income Tax Arrears Relief Calculator U/s 89(1)With Form 10 e from the F.Y. 2000-01 to F.Y. 2019-20

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Automated Income Tax Arrears Relief Calculator with Form 10E from the F.Y. 2000-01 to F.Y. 2019-20 ( Updated Version)

HOW TO CLAIM RELIEF WHEN SALARY IS PAID IN ARREARS OR IN ADVANCE

Whereby any portion of assessee’s salary is received in arrears or in advance or by reason of his having received in any one financial year salary for more than 12 months or payment which under the provisions of section 17(3) is a profit in lieu of salary, he is hence taxed at a higher slab then that at which it would otherwise have been assessed. The Assessing The officer shall, on an Application made to him, grant such relief as prescribed. The Procedure for computing the relief is given in Rule 21.  This relief is provided in the financial year in which such arrears have been received.

 The Procedure to calculate the amount of relief when salary is paid in arrears or in advance:-

STEP 1

First of all, calculate the tax payable of the previous year in which the arrears /advance salary is received on

1.Total Income inclusive of Additional Salary

2. Total Income exclusive of Additional Salary

The Difference between 1 & 2 is the tax on additional salary Included in total Income.

STEP 2

Now calculate the tax payable of every previous year to which the additional salary relates to

3. 3.The total Income including Additional Salary
   The Total Income excluding Additional Salary

Calculate the difference between 4 & 5 for every previous year to which the additional salary relates & aggregates them.

STEP 3

The Admissible Relief shall be the Excess between the tax on Additional salary as calculated under STEP 1 & STEP 2.

No relief if:

·                                 There is no excess between the tax calculated on Additional Salary (Step 1 & Step 2)

·                                 In respect of any amount received or receivable by an assessee on his voluntary retirement or termination of his service in accordance with any the scheme, the assessee has claimed exemption u/s 10(10C) in respect of such the compensation received on voluntary retirement in the same assessment year or any other assessment year.

 WHERE AND HOW TO FURNISH INFORMATION FOR CLAIMING RELIEF

In the case where the assessee entitled to relief is a government servant or an employee in a company, co-operative society, local authority, university, association, institution, he
may furnish the particulars to his employer who is responsible for making the payment referred to in section 192(1) in specified form 10E.

In the case of other employees, the application for relief shall have to be made to the Assessing Officer instead of the Employer.

Download Automated Income Tax Arrears Relief Calculator U/s 89(1)With Form 10 e from the F.Y. 2000-01 to F.Y. 2019-20

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What is the Procedure of Calculation of Arrears Relief Calculation U/s 89(1) with Automatic Arrears Relief Calculator with Form 10E from F.Y. 2000-01 to F.Y.2017-18

WHAT IS THE ACTUAL CALCULATION OF ARREARS RELIEF U/S 89(1) AND WHAT'S THE PROCEDURE TO CALCULATE THE ARREARS RELIEF WHICH IS GET THE AMOUNT OF AN EMPLOYEE BEHIND HIS PREVIOUS YEARS. HERE IS GIVEN THE AUTOMATIC ARREARS RELIEF CALCULATOR SINCE THE FINANCIAL YEAR 2000-01 TO 2013 WITH FORM 10E.

BELOW GIVEN THE METHOD OF CALCULATION U/S 89(1)AS PER THE INCOME TAX RULES.

SECTION 89 l RELIEF WHEN SALARY ETC., IS 

PAID IN ARREARS OR IN ADVANCE

Scope of relief under the section in five situations explained

1. Section 89(1) authorises the grant of relief in a case where an employee receives a salary in arrears or in advance or has received in any fiscal year salary for more than twelve months, a payment which under the provisions of section 17(3)(ii) is a profit in lieu of salary.  The effect of such increase is that the income will be assessed at a higher rate than it otherwise would have been assessed and it is for this reason that section 89(1) authorises relief to be allowed.  The relief is to be allowed in terms of rule 21A of the Income-tax Rules, 1962.

2. Rule 21A(1) enumerates the following five different situations wherein the assessees will be entitled to relief (four of these are specific situations while the fifth is a residuary one) :

   a.  salary being received in arrears or advance;

   b.  where the payment is in the nature of gratuity in respect of past services extending over a period of not less than five years is received;

   c.  where the payment is in the nature of compensation received by the employee from his employer or former employer at or in connection with a termination of his employment after continuous service of not less than three years and where the unexpired portion of the term of employment is also not less than three years;

   d.  where the payment is in the nature of commutation of pension;

   e.  where the payment is not covered by the description given in (a) to (d) above.

The relief is to be worked out in the first four situations in accordance with the specific modes described in rule 21A (2)(a) to (d).

3. The authority to grant relief in the four specific cases is the Income-tax Officer assessing the employee.  In the residua case, it is Central Board of Direct Taxes.

4. The relief under section 89(1) is to be given in the assessment in which the extra payment by way of arrears, advance, etc., is taxed. The mode of granting relief spelled out in rule 21A(2) to 21A(5) would show that in all the four different cases the exercise of giving relief is initiated by bringing to tax the whole of the extra amount in the assessment for the assessment year relevant to the year of receipt. Basically, the relief under section 89(1) is arithmetical. It involves finding out of two rates of tax. The first is the rate of tax applicable to the total income including the extra amount in the year of receipt. The second is finding out the rate by adding the arrears to the total income of the years to which they relate. For this purpose, the assessee should be asked for a true and authentic statement of the total income of the earlier years to which the arrears pertain  There is no warrant for issuing a notice under section 148 or calling for returns of income of the earlier years.

Circular: No. 331 [F.  No. 174/102/79-IT(A-I)], dated 22-3-1982. 

Click here to Download Automated Arrears Relief Calculator with Form 10E from the Financial Year 2000-01 to Financial Year 2017-18

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